Correlation Between Central Reinsurance and Capital Securities
Can any of the company-specific risk be diversified away by investing in both Central Reinsurance and Capital Securities at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Central Reinsurance and Capital Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Reinsurance Corp and Capital Securities Corp, you can compare the effects of market volatilities on Central Reinsurance and Capital Securities and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Central Reinsurance with a short position of Capital Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Reinsurance and Capital Securities.
Diversification Opportunities for Central Reinsurance and Capital Securities
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and Capital is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Central Reinsurance Corp and Capital Securities Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Securities Corp and Central Reinsurance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Central Reinsurance Corp are associated (or correlated) with Capital Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Securities Corp has no effect on the direction of Central Reinsurance i.e., Central Reinsurance and Capital Securities go up and down completely randomly.
Pair Corralation between Central Reinsurance and Capital Securities
Assuming the 90 days trading horizon Central Reinsurance is expected to generate 2.07 times less return on investment than Capital Securities. But when comparing it to its historical volatility, Central Reinsurance Corp is 1.23 times less risky than Capital Securities. It trades about 0.06 of its potential returns per unit of risk. Capital Securities Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,150 in Capital Securities Corp on September 1, 2024 and sell it today you would earn a total of 1,135 from holding Capital Securities Corp or generate 98.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Central Reinsurance Corp vs. Capital Securities Corp
Performance |
| Timeline |
| Central Reinsurance Corp |
| Capital Securities Corp |
Central Reinsurance and Capital Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Reinsurance and Capital Securities
The main advantage of trading using opposite Central Reinsurance and Capital Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Reinsurance position performs unexpectedly, Capital Securities can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Capital Securities will offset losses from the drop in Capital Securities' long position.| Central Reinsurance vs. Wistron Information Technology | Central Reinsurance vs. Fortune Information Systems | Central Reinsurance vs. Sunmax Biotechnology Co | Central Reinsurance vs. Golden Biotechnology |
| Capital Securities vs. Central Reinsurance Corp | Capital Securities vs. Huaku Development Co | Capital Securities vs. Fubon Financial Holding |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |